The imminent release of master agreements in China is being eagerly awaited by officials who expect them to give greater certainty to the nascent onshore market. "It should boost market volumes and inspire local institutions to gain greater familiarity with the use and benefits of derivatives," said Angela Papesch, director of policy and head of the Asia-Pacific office for theInternational Swaps and Derivatives Association in Singapore. Dubbed the principal agreements for renminbi forwards and swaps, the documents will provide guidance to derivative contracts onshore in China, in accordance to domestic laws.
The agreements, to be issued by the State Administration of Foreign Exchange and the China Foreign Exchange System, have been in the works since last year. After a meeting of domestic and foreign industry participants in May, market officials expect the agreement to be issued in the coming weeks. "The latest draft is more in-line with ISDA agreements, now incorporating such features as close-out netting," noted Papesch. She continued, "The downside however, is that there will be an additional layer of complexity as institutions will need to gain familiarity with these agreements in addition to the international standards."
The renminbi-denominated derivatives market opened to foreign participants last year, with much fanfare (DW, 9/16). Officials at SAFE in Beijing declined to comment.
